Total quality management in the function of value creation: View from the strategic management perspective

Abstract

The contemporary business environment requires companies to be highly flexible in terms of adapting to customer requirements, to be consistent in quality and price-competitive, while the ultimate goal of the company is to create value for its owners. Therefore, in a long run, the sustainability of business is based on value creation for both customers and business owners. Total Quality Management (TQM) is a strategic approach to quality assurance that is based on continuous improvement of the quality of all activities in a company in order to achieve a sustainable competitive advantage. Competitive advantage is a consequence of creating value for customers to a degree which outperforms competitors, which results in value created for business owners, provided that the return on invested capital is greater than the invested capital cost. The subject of the research presented in this paper is the influence of TQM on creating value for customers and business owners. The empirical research was conducted on a sample of 141 companies in the Republic of Serbia that have a valid certificate of conformity of the quality management system with the requirements of ISO 9001. The relationship between the key TQM success factors and the market and financial performance was analyzed. Market performance indicators point to the value created for customers, while financial performance indicators correspond to the value created for business owners. The research results reveal a positive impact of TQM on creating value for customers and business owners, whereas the intensity of this impact varies depending on the used performance measurements.